Summary of Government Policies
Special Stamp Duty (SSD)Buyer Stamp Duty (BSD)Double Stamp Duty (DSD)Loan RatioStress TestingMortgage Insurance
Home BuyerApplicable
( Detail )
Applicable for any person or entity, except a HKPR
( Detail )
Application to the Mon-first tie buyer (includes Residence, commercial, industrial, shops and car park) ( Detail )Applicable
( Detail )
Applicable
( Detail )
Applicable
( Detail )
Commercial and Industrial Properties Buyer-- Application to the Mon-first tie buyer (includes Residence, commercial, industrial, shops and car park) ( Detail )Applicable
( Detail )
Applicable
( Detail )
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Special Stamp Duty (SSD)
The adjusted SSD will have three levels of regressive rates for different holding periods –

( i )   20 per cent if the property has been held for six months or less;

( ii )  15 per cent if the property has been held for more than six months but for 12 months or less; and

( iii ) 10 per cent if the property has been held for more than 12 months but for 36 months or less.
Buyer’s Stamp Duty(BSD)
The BSD will be charged at a flat rate of 15 per cent for all residential properties, on top of the existing stamp duty and SSD, if applicable, acquired by any person or entity, except a HKPR. Exemptions will be provided to certain transactions including, for example, those involving a HKPR and his or her close relatives who are not HKPR.
New Stamp Duty (Double Stamp Duty DSD)
On 22 February 2013, the Financial Secretary announced that the Government would amend the Stamp Duty Ordinance to adjust the ad valorem stamp duty (AVD) rates. The new AVD rates are as follows.

The new stamp duty rates will not apply to Hong Kong permanent resident buyers who are not beneficial owners of any other residential property in Hong Kong at the time of acquisition of a residential property.

(Where the stamp duty calculated includes a fraction of $1, round-up the duty to the nearest $1.)
Amount or value of the consideration Rate
Exceeds Does not exceed
- $2,000,000 1.5%
$2,000,000 $2,176,470 $30,000 + 20% of excess over $2,000,000
$2,176,470 $3,000,000 3%
$3,000,000 $3,290,330 $90,000 + 20% of excess over $3,000,000
$3,290,330 $4,000,000 4.5%
$4,000,000 $4,428,580 $180,000 + 20% of excess over $4,000,000
$4,428,580 $6,000,000 6%
$6,000,000 $6,720,000 $360,000 + 20% of excess over $6,000,000
$6,720,000 $20,000,000 7.5%
$20,000,000 $21,739,130 $1,500,000 + 20% of excess over $20,000,000
$21,739,130 - 8.5%
* The new AVD rates are subject to passage of the relevant legislation.


Remarks:

The Hong Kong Government proposes to relax the "six-month" timeframe for owners having acquired a new residential property before disposing of their original one. To specify the "six-month" timeframe under the current arrangement in the Bill be adjusted to commence from the conveyance on sale instead of the agreement for sale and purchase of the newly acquired property.

Also, the government proposes a slight modification to the "two-year" timeframe for application to IRD for stamp duty refund as specified in the Bill. While maintaining the two-year application timeframe after the execution of an agreement for sale and purchase of the newly acquired property, and include a new clause to allow for application within two months from the conveyance on sale of the original residential property, whichever is the later. This is meant to enable buyers of changing properties, including those who acquire uncompleted flats, to apply for refund after completion of transactions to cater for actual circumstances.

Another adjustment is related to the exemption arrangement in respect of acquisition of a residential property with a car parking space. In accordance with the Bill and the prevailing practice by the Stamp Office, when a HKPR acting on his or her behalf in acquiring a residential property and a car parking space by a single instrument, the concerned residential property in the transaction can be exempted from the doubled AVD while the car parking space will not be exempted given that it is a non-residential property.
Load Ratio limitation
Prudential Measures on Loan-to-Value Ratio and Debt-Servicing Ratio for Property Mortgage Loans with effect from 27 February 2015
Table 1A: Maximum loan-to-value (LTV) ratio (applicable to applicants who have not borrowed or guaranteed other outstanding property mortgage loans)1
Property value Residential properties Commercial and industrial properties, standalone car park spaces
Self-use Non-self-use or company held Applicants’ income mainly derived in Hong Kong (HK) Applicants’ income mainly derived from outside HK2
Applicants’ income mainly derived in Hong Kong (HK) Applicants’ income mainly derived from outside HK2 Applicants’ income mainly derived in Hong Kong (HK) Applicants’ income mainly derived from outside HK2
(A) Debt-servicing ratio (DSR)-based lending
< HK$7 million 70%->60%
(subject to a loan cap of HK$4.2 million)
60%->50%
(subject to a loan cap of HK$3.5 million)
50% 40% 40% 30%
≥ HK$7 million
but
< HK$10 million
60%
(subject to a loan cap of HK$5 million)
50%
(subject to a loan cap of HK$4 million)
≥HK$10 million 50% 40%
(B) Net-worth-based lending
Regardless of property value 40% 30%
1 : The new supervisory measures introduced on 27 February 2015 are marked in red.
2 : Applicants will not be subject to the LTV ratio limit reduction if they can demonstrate having a close connection with Hong Kong, e.g. they are seconded by local employers to work outside Hong Kong with documentary proof provided by the employers; or their immediate family members (i.e. parents, spouse, and descendants) are residing in Hong Kong.
Table 1B: Maximum LTV ratio (applicable to applicants who have borrowed or guaranteed other outstanding property mortgage loans)1
Property value Residential properties Commercial and industrial properties, standalone car park spaces
Self-use Non-self-use or company held Applicants’ income mainly derived in Hong Kong (HK) Applicants’ income mainly derived from outside HK2
Applicants’ income mainly derived in Hong Kong (HK) Applicants’ income mainly derived from outside HK2 Applicants’ income mainly derived in Hong Kong (HK) Applicants’ income mainly derived from outside HK2
(A) Debt-servicing ratio (DSR)-based lending
< HK$7 million 70%->60%
(subject to a loan cap of HK$4.2 million)
50%->40%
(subject to a loan cap of HK$2.8 million)
50% 30% 40% 20%
≥ HK$7 million
but
< HK$10 million
60%
(subject to a loan cap of HK$5 million)
40%
(subject to a loan cap of HK$3 million)
≥HK$10 million 50% 30%
(B) Net-worth-based lending
Regardless of property value 30% 20%
1 : The new supervisory measures introduced on 27 February 2015 are marked in red.
2 : Applicants will not be subject to the LTV ratio limit reduction if they can demonstrate having a close connection with Hong Kong, e.g. they are seconded by local employers to work outside Hong Kong with documentary proof provided by the employers; or their immediate family members (i.e. parents, spouse, and descendants) are residing in Hong Kong.
Table 2: Maximum debt-servicing ratio (DSR)1
Self-use residential properties and car park spaces23 Non-self-use residential properties, commercial and industrial properties and car park spaces
Applicants who have not borrowed or guaranteed other outstanding property mortgage loans, or applicants who replace an existing property4、or apply refinancing
Base-DSR cap 50% 50%->40%
Stressed-DSR cap 60%
assuming an interest rate hike of 300 bps
60%->50%
assuming an interest rate hike of 300 bps
Applicants who have borrowed or guaranteed other outstanding property mortgage loans5
Base-DSR cap 40%
Stressed-DSR cap 50%
assuming an interest rate hike of 300 bps
1 : The new supervisory measures introduced on 27 February 2015 are marked in red.
2 : “Self-use” refers to occupancy by the owners or their immediate family members (i.e. parents, spouse, children and siblings), or by an individual majority shareholder or his/her immediate family members if the property is held through a shell company.
3 : When considering applications by operating companies for self-use property mortgage loans or credit facilities secured by properties to support the genuine business or funding needs of their normal business operations, authorized institutions adopt a set of more comprehensive credit underwriting standards and assessment, and conduct closer credit monitoring and more frequent credit reviews that are applicable to corporate borrowers. Therefore, the relevant countercyclical measures do not apply to self-use commercial and industrial property mortgage loans for operating companies.
4 : This includes applicants making a new mortgage application to acquire a property before disposing an existing one. In such cases, the applicants have to repay the outstanding mortgage loans of the existing property within six months upon the drawdown of the mortgage loan for the new property.
5 : This includes applicants acquiring a second property for self-use.
Stress Testing
Banks must assume a mortgage rate increase of 300 basis points, instead of the existing 200 basis points, in stress-testing mortgage applicants’ repayment ability. He added this measure will apply to mortgage loans for all property types.
Revisions for Mortgage Insurance Programme (MIP)
The Hong Kong Mortgage Corporation Limited (HKMC) announced that revisions will be made to the eligibility criteria for the Mortgage Insurance Programme (MIP). The revisions will apply to MIP applications with provisional sale and purchase agreement signed on or after 27 February 2015.

Currently, properties with value at or below HK$6 million are eligible for the maximum MIP cover of 80% loan-to-value (LTV).

From 28 February 2015, revisions were made to the eligibility criteria for the MIP.

After revisions, the maximum LTV ratio was as follows:
Property Value Maximum LTV Ratio
Up to HK$4 million 80% or 90%*
Above HK$4 million and below HK$4.5 million 80% ~ 90%*,
subject to a cap of HK$3.6 million(whichever is lower)
At or above HK$4.5 million and up to HK$6 million 80%
or capped at HK$4.8 million(whichever is lower)
*Only applicable to regular salaried first time homebuyers (not holding any residential properties at the time of application) with maximum debt-to-income ratio of 45%

Information as of the latest release date of the new mortgage tightening measures by HKMA on 27 February 2015.

The above information is for reference only. For details, please refer to relevant websites.

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